There’s an open secret in the electricity industry: ‘green’ electricity contracts are not really green.
The problem with ‘green’ certificates
A renewable electricity project (e.g., a solar park) today produces two commodities: Guarantees of Origin and the electricity itself. A Guarantee of Origin (GO) (also known as Renewable Energy Certificates (REC) in North America) is a certificate representing a unit of renewable electricity, usually 1 MWh.
Consumers can use GOs to claim that a unit of electricity came from a specific renewable source, like solar energy. Notably, GOs can either be sold independently from the electricity they represent, known as unbundled GOs, or together with the electricity they represent, known as bundled GOs.
Today, when you buy an off-the-shelf 'green' electricity contract, you actually buy unbundled ‘Guarantees of Origin’ (GO). This allows you to claim that you consume carbon-free electricity — despite it not changing the mix of electricity you consume. This is a problem. Electricity grids are rarely 100% carbon-free, and there is little evidence to suggest that the purchase of GOs helps add more renewable energy to the grid.
Moreover, because unbundled GOs are sold separately from the associated electricity, they can represent electricity that has already been produced and consumed, sometimes in an entirely different country than your own electricity consumption. As a result, you run the risk of overestimating your climate contributions and greenwashing your electricity consumption.
Why does electricity matter?
- Electricity and heat generation is a major driver of climate change in the world, accounting for around 25% of global carbon emissions.
- Over the next 10 years, our demand for electricity will double — from 35 to 71 TWh (Danish numbers), and potentially more.
- Not only do we need more renewable energy to meet growing demand: we also need to replace all the fossil fuel-based systems that lead to emissions today. In Denmark, which is relatively advanced when it comes to renewables, we still only get roughly 60% of our electricity from wind and solar.
It’s time to do better. Changing the way we produce, buy, use, and report electricity is one of the single most important challenges we need to overcome if we are to solve the climate crisis.
At Reel, we believe that the current ‘green’ electricity system is not just poorly designed, but makes matters worse by enabling easy accounting solutions over actual climate contributions. We’re here to change that.
Rethinking electricity, the Reel way
Reel is Denmark’s leading electricity provider built on climate science, working to accelerate the renewable energy transition. We are on a mission to make it easy for all companies to procure electricity that helps fight climate change, on a stable budget.
With Reel, companies sign Power Purchase Agreements, electricity contracts that build new solar and wind parks.
These parks feed additional renewable electricity into the same electricity grid that powers each company. In return, companies benefit from real climate contributions and emission reductions. At the same time, we offer low, fixed prices - in contrast to the volatile costs of typical in the electricity - benefitting your budget and the climate.
